Mitt’s Mythical “Mass. Miracle”

Michigan is like the canary in the mine shaft,” Republican White House contender Willard Mitt Romney told voters in Warren Friday. “What happens in Michigan is going to happen to the rest of the country.” He also claims in a campaign commercial, “I understand how the economy works. There’s a lot we can do to strengthen Michigan.”

One could take Romney seriously as an architect of economic redevelopment if he had displayed such skills as Massachusetts governor. Instead, his reign was a parade of economic stagnation and retreat. He even advocated an SUV-tax increase that would have hammered the very same domestic automotive industry he now says he champions.

Andrew Sum and Joseph McLaughlin of the Center for Labor Market Studies at Boston’s Northeastern University placed Romney’s rule beneath their statistical microscope. Let’s hope what they discovered is not contagious.

“Our analysis reveals a weak comparative economic performance of the state over the Romney years, one of the worst in the country,” the researchers wrote in the Boston Globe. Specifically, they found:

  • As U.S. real output grew 13 percent between 2002 and 2006, Massachusetts trailed at 9 percent.
  • Manufacturing employment fell 7 percent nationwide those years, but sank 14 percent under Romney, placing Massachusetts 48th among the states.
  • Between fall 2003 and autumn 2006, U.S. job growth averaged 5.4 percent, nearly three times Massachusetts’ anemic 1.9 percent pace.

While 8 million Americans over age 16 found work between 2002 and 2006, the number of employed Massachusetts residents actually declined by 8,500 during those years.

“Massachusetts was the only state to have failed to post any gain in its pool of employed residents,” professors Sum and McLaughlin concluded.

Romney’s vaunted healthcare plan also disappoints. It forces individuals to purchase medical coverage and slaps the non-compliant with “tax penalties,” as a state-government radio ad described them last November. These charges were $219 in 2007, equal to the personal exemption on Massachusetts’ state tax. However, this year’s formula could crank this figure up to $912. Businesses with at least 11 workers either must offer health insurance or face annual fines of $295-per-uninsured employee. This is consistent with Romney’s statement at a January 5 GOP presidential debate: “I like mandates.”

This program is run not by the free market, but by the Commonwealth Health Insurance Connector, a Romney-created government bureaucracy. For 2007, reports the Pacific Research Institute’s Sally Pipes, RomneyCare is expected to have cost taxpayers some $619 million. That’s $147 million and 31 percent above original projections.

Romney blames all this on tinkering Democratic state legislators.

“I don’t know what’s going to happen down the road as the Democrats get their hands on it,” Romney told the National Review Institute. “I was a little concerned at the signing ceremony when Ted Kennedy showed up.”

Romney’s Pontius-Pilate-like hand washing is thoroughly unconvincing. Bay State Democrats would have struggled to hijack health reform based on tax incentives, choice, and ownership, as a true free-marketeer would have insisted, rather than RomneyCare’s easily scaled universal mandates, regulatory boards, and government-imposed standards.

Romney also doomed Massachusetts by hiking taxes and fees, which fouled that state’s business climate.

“Tax rates on many corporations almost doubled because of legislation supported by Romney,” Boston Science Corporation chairman Peter Nicholas wrote in the January 6 Boston Herald. Romney boosted taxes on subchapter S corporations owned by business trusts from 5.3 percent to 9.8 percent, a four-fifths increase. Nicholas called this “an important disincentive to investment, growth, and job creation.”

“Corporate taxes went up $210 million under Romney,” the Herald editorialized. “And we wonder why companies look north, south, east and west, anywhere but Massachusetts, to expand?”

While Romney sped a $275 million capital-gains tax rebate, scored property-tax relief for seniors and secured a two-day, tax-free shopping holiday, he imposed $283 million in business “loophole closures” and $501.5 million in increased fees on marriage licenses, gun registrations, gasoline deliveries, real-estate transfers, and more. Under Romney, the Tax Foundation calculated, Massachusetts fell from America’s 29th most business-friendly state to No. 36.

One of Romney’s tax measures particularly should interest Michigan voters. As U.S. Senator John McCain (R- AZ) on Saturday told journalists covering his presidential bid in Michigan, “Governor Romney says he supports the [automobile] industry, yet when he was running for the governor of another state, he wanted to raise the tax on SUVs.”

Indeed, candidate Romney promised to “rework” Massachusetts’ automobile excise tax to favor fuel-efficient vehicles. As John Gregg explained in the September 5, 2002 Milford Daily News, lower taxes on such cars “could be offset by higher charges for new gas guzzlers, the campaign acknowledged.” Romney also called for a 10-year sales-tax holiday for hybrid gas/electric cars, such as the Toyota Prius. At the time of Romney’s proposal, such vehicles were much likelier to roll off of assembly lines in Yokohama than Ypsilanti.

“This is a substantial tax savings for the buyers of these vehicles,” Romney’s spokesman, Eric Fehrnstrom, told Gregg at the time. “We want to encourage their purchase.”

Romney’s idea won immediate applause — from the Left.

“It’s an extremely popular idea in some environmental circles,” said Seth Kaplan, a senior attorney with the Conservation Law Foundation. “It makes an enormous amount of sense to reward what is good behavior from a societal point of view.”

“Conceptually, it makes a lot of sense,” said Democratic State Senator David Magnani. “It’s a good Democratic idea, a good environmental idea.”

Massachusetts tax fighters, however, did not join in the liberal applause. As Barbara Anderson, chief of Citizens for Limited Taxation, told John Gregg, Romney’s SUV levy “would be a tax increase, and that is certainly unacceptable.”

As Michigan voters consider Mitt Romney’s prescription for economic renewal, they would be wise to repeat these words: Don’t try this at home.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

Scroll to Top